Hull Council 'printing its own money' by paying digital cash for voluntary work

Hull City Council is “printing its own money” by creating a Bitcoin-like
digital currency called HullCoin which it will use to pay people for
carrying out voluntary work, tax-free and without loss of benefits

Hull City Council will be handing out HullCoins for voluntary workPhoto: AP

Hull City Council is creating its own Bitcoin-like digital currency called HullCoin which it will donate to people in return for carrying out voluntary work.

The unprecedented move is a bid to “tackle poverty” and boost the local economy. Struggling residents will carry out "voluntary work" and receive HullCoins as payment. These digital coins could then be used to pay rent or council tax, or buy other goods and services such as fruit and vegetables. Council workers are currently investigating whether deals could be signed that would even allow them to be used at highstreet shops such as Asda.

Those virtual earnings would not be taxable or affect any existing benefits claims because digital money is not yet treated as traditional currency by HMRC or the Department for Work and Pensions, the council said.

Dave Shepherdson, the council’s Financial Inclusion Support Officer, said that problems would only arise if people used online exchanges to convert HullCoins into cash.

“The idea is that we’ll provide it to people on low incomes for them to pay for things that they wouldn’t otherwise be able to pay for, particularly food and fuel. It’s a very different sort of project,” he said.

Digital currency is "mined" into existence by a computer carrying out complex and specific calculations. Cryptographic systems then track who owns which coins and enable them to be transferred from person to person. Coins are kept in a "wallet" which takes the form of a small computer file.

Shepherdson estimated that it would take between ten and 12 weeks for the council to mine enough coins to pay for the hardware it had bought to power the project. After that, the scheme would be in profit. The authority is currently mining with a computer fitted with two powerful Sapphire R9 290X graphics cards.

“We’re printing our own money, I suppose,” he said.

If successful, the project could be expanded in scope and split out into its own company that would act as a “digital bank of Hull” and provide other crypto-currency services to the community.

The Lakota people are indigenous to parts of North and South Dakota and are made up of a confederation of seven Sioux tribes, with notable members including Sitting Bull and Crazy Horse, who defeated Custer at the Battle of Little Bighorn.

Developer Payu Harris said that he hoped it would help lift the tribe out of poverty: “I looked at how things were for the tribe now and suddenly had an idea about how we might fix it. We can’t continue to be 20 years behind the times, always trying to catch up. We have to be forward-thinking.

"I think crypto-currencies could be the new buffalo. Once, it was everything for our survival. We used it for food, for clothes, for everything. It was our economy. I think MazaCoin could serve the same purpose."